New ETFs to know about
If you like passive funds that track the entire market, you may like these two ETFs.
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I'm a fan of passive tracker funds that track the entire market at a low cost. They are easy to understand, give you market returns, and have low fees; which makes them suitable for most investors.
There are two new ETFs that recently debuted on the London Stock Exchange that I think are worthy of inclusion in any investor's portfolio. There are some quirks to take note of so do pay attention!
What are the two ETFs?
PACW tracks global markets, meaning both developed, and emerging markets, while MWOZ tracks only developed markets. As emerging markets tend to be less efficient, ETFs tracking emerging markets deal tend to cost more too, with higher expense ratios.
Investors should take note that these ETFs are not tracking indices published by FTSE, or MSCI. Instead, the two ETFs are tracking indices by Solactive, a German index provider. SRS/CPF-OA investors who invest in Amundi funds should be familiar with Solactive; the Amundi Prime USA fund is tracking an index by Solactive too.
There is little to no difference whether a fund is tracking an index by FTSE, MSCI, or Solactive. There is only one world; if you are tracking the global market, how different can the index constituents be?
Things to take note
There are two things to take note.
The two listed ETFs are denominated in GBP. It can be annoying if you prefer to only deal with a single currency. However, GBP is also a G10 currency, so you should get good exchange rates regardless of which trading platform you use.
The second thing to take note is that dividends are paid out, and not automatically reinvested. This means that you will have to pay to reinvest the dividends received. I don't think this is a deal breaker too as you are already paying lower fees due to a lower expense ratio.
What should you do?
If you are investing in one of the funds that I mentioned previously, you may want to take a look at PACW and MWOZ instead. Despite the quirks, they have a place in most portfolios.
Do take note that these funds are newly listed, and liquidity may be poor at the moment. However, that shouldn't bother you if you are a long term investor.